(a) Definitions. For purposes of this section:
(1) Iranian financial institution means any foreign financial institution, as defined at section 1010.605(f),
organized under Iranian law wherever located, including any agency,
branch, office, or subsidiary of such a financial institution operating
in any jurisdiction, and any branch or office within Iran of any foreign
financial institution.
(2) Correspondent
account has the same meaning as provided in section 1010.605(c).
(3) Covered financial institution has the same meaning as provided in section 1010.605(e)(1).
(4) Foreign bank has the same meaning
as provided in section 1010.100.
(5) Subsidiary means a company of which more than 50 percent
of the voting stock or analogous equity interest is owned by another
company.
(b) Prohibition
on accounts and due diligence requirements for covered financial institutions.
(1)
Opening or maintaining correspondent accounts
for Iranian financial institutions. A covered financial institution
shall not open or maintain in the United States a correspondent account
for, or on behalf of, an Iranian financial institution, unless such
account is authorized by United States Department of the Treasury’s
Office of Foreign Assets Control (OFAC).
*(2) Prohibition on use of correspondent accounts. A covered financial institution shall take reasonable steps to not
process a transaction for the correspondent account of a foreign bank
in the United States if such a transaction involves an Iranian financial
institution, unless the transaction is authorized by, exempt from,
or not prohibited under the International Emergency Economic Powers
Act (IEEPA) (50 U.S.C. 1701 et seq.), any regulation, order,
directive, or license issued pursuant thereto, or any other sanctions
program administered by the Department of the Treasury’s Office of
Foreign Asset Control.
(3) Special due diligence of correspondent accounts
to prohibit use.
(i) A covered financial institution shall apply special due diligence
to the correspondent accounts of a foreign bank that is reasonably
designed to guard against their use to process transactions involving
Iranian financial institutions that are prohibited, and not authorized
or exempt, pursuant to the IEEPA, any regulation, order, directive,
or license issued pursuant thereto, or any other sanctions program
administered by the Department of the Treasury’s Office of Foreign
Asset Control (“prohibited transactions”). At a minimum, that special
due diligence must include:
(A) Notifying those foreign correspondent account holders that the
covered financial institution knows or has reason to believe the correspondent
account is being used to process transactions involving Iranian financial
institutions that such prohibited transactions may not take place;
and
(B) Taking reasonable steps to
identify any use of its foreign correspondent accounts for prohibited
transactions involving Iranian financial institutions, to the extent
that such use can be determined from transactional records maintained
in the covered financial institution’s normal course of business.
(ii) A covered financial
institution shall take a risk-based approach when deciding what, if
any, other due diligence measures it reasonably must adopt to guard
against the use of its foreign correspondent accounts to process prohibited
transactions involving Iranian financial institutions.
(iii) A covered financial institution
that knows or has reason to believe that a foreign bank’s correspondent
account has been or is being used to process prohibited transactions
involving Iranian financial institutions shall take all appropriate
steps to further investigate and prevent such access, including the
notification of its correspondent account holder under paragraph (b)(3)(i)(A)
of this section and, where necessary, termination of the correspondent
account.
(4) Recordkeeping and reporting.
(i) A covered financial institution
is required to document its compliance with the notice requirement
set forth in this section.
(ii)
Nothing in this section shall require a covered financial institution
to report any information not otherwise required to be reported by
law or regulation.
